Investing Information

The Economys Greatest Depression Downturn Ever Is Now Just A Few Years Away


What really controls the economy? Forget interest rates, forget deficits, forget the Fed, forget IRAQ, forget which party is in office. In fact, forget just about everything that permeates the news. The greatest force that has controlled the long-term trend of the economy for at least the last century doesn't give a fig about any of these side-shows. And just what is this "greatest force" now telling us in 2005? The same thing that it has been telling us for at least the last twenty years - that the onset of a catastrophic depression, unprecedented in history, has been marching silently and steadily towards us, and that it is now just a few years away.

It has long been suggested (and feared) that the 77 million or so US Baby Boomers will tank the economy big-time as they begin to pull their savings out of Wall Street when they start retiring around 2011. Well, first of all there are not 77 million. There are really over 100 million American Baby Boomers because the birth upswing actually began in the late thirties not the, "traditionally" chosen, erroneous, post war year of 1946. This means that whatever problems they might created just got 30% worse, and true earliest Baby Boomer retirement began around 2001. Secondly, the hard evidence of nearly a century shows that people retiring has never been a force in the overall trend of the economy. Let's get back to basics to see why.

It is a well established economic fact that around 60-70% of the GDP (gross domestic product) is simply consumers spending just about all of their hard-earned income. What many people don't know, or at least don't think about, is that it's more than 90% when national and local government expenditures, first taken in from consumers' incomes as taxes of all kinds, are included. The bottom line is that the consumer is always the greatest force in the economy - and it is overwhelming! It's just a simple, hard economic fact. It is therefore only common-sense that the long-term trend of the economy must be controlled somehow by this absolutely massive consumer spending component. In the short-term (1 to 3 years) many factors, such as war, terrorism, oil and corporate scandal can seriously affect the economy, but they are always side-shows to the much bigger "hidden" picture.

To figure out what is happening in this hidden picture we must look at who we the consumers are with regard to our ability to spend. Obviously, a thousand middle-aged men or women earning and spending $40,000 a year are going to have a vastly different effect on the economy (GDP) than a thousand 15 year-old teenagers spending an allowance of $1000 a year. According to data published by the US Bureau of Labor Statistics the group with the biggest spending by far is the 45-54 year-olds. This makes total sense of course. They are at their peak earnings with huge matching expenditures to support teenage and college kids, their biggest mortgage, their best cars etc. If five year groupings (45-49 in 1920, progressing for logical reasons to 50-54 by 2000) within the 45 to 54 year-olds in the US population is plotted against the Dow Jones Industrial Average (the economy), adjusted for inflation using the CPI (Consumer Price Index) issued by the US government, a breathtaking, near glove-fit correlation covering the best part of a century is revealed. (See the chart within the referenced website). This isn't conjecture. It's a hard economic fact.

The greatest force in the economy can be indisputably demonstrated to be consumer demographics, and within that the 45 to 54 year-olds demographic is just as clearly all-powerful. Things like interest rates, deficits, who is elected, and inflation are followers or consequences of the economy, not the makers of it. The Fed raises or lowers rates because the economy tells it to. Stock market crashes don't cause recessions or depressions. It is the other way around. The DJIA is simply following the 45 to 54 year-olds demographic down to reflecting the new lower value of stocks as the economy declines. For easy to understand, fundamental reasons the economy has followed the big-spending 45-54 year-olds demographic for nearly a century. History shows that the economy always declines when the number of big-spending 45 to 54 year-olds in the population declines, a full 11 to 20 years before they retire. This happened rapidly in the early 1930s, slowly thank goodness in the 1970s, and will happen again from 2013 to 2025, rapidly, relentlessly and catastrophically. This must not be confused with Baby Boomers retiring. They retire 11-20 years after their peak spending years end. While their retirement independently creates major unprecedented problems with social security and Medicare, the inevitable depression they cause by stopping their big-spending, happens first. If you accept their inevitable, later demographic impact on social security and Medicare, you must, for the same underlying reasons, accept their earlier bigger impact on the economy, even though tragically virtually no one is talking about it - yet.

Picture this: The great American economy is an ocean whose total depth is made up overwhelmingly of the combined spending of all the various age groups. The heaving waves on the surface of this deep ocean are always the big-spending of the 45 to 54 year-olds group. These waves produce the peaks and troughs of the economy - the long-term booms and busts. They can and have both raised and sunk ships. We will soon have to man the lifeboats as the greatest demographic wave in history crashes down with a thunderous roar! Like the great Titanic, there will not be enough time or enough lifeboats onboard, and only very limited rescue available.The USA has just a few more years left of solid economic growth with an accompanying rise in the DJIA. After that, starting no later than 2012-13, and perhaps as early as 2009-10, an economic decline of terrible proportions begins and lasts until about 2025. Unlike their parents, Baby Boomers everywhere are truly not going to have a pleasant retirement. Starting in 2003-2004, the economy resumed its march upwards right in line with the 45-54 demographic, accompanied by the matching rise in the DJIA. The next several years up until 2012 latest represent the last chance for a very long time to make any money by traditionally investing in stocks. From 2013 to 2025 the big-spending 45 to 54 year-olds that control the trend of the economy will only be there in relentlessly declining numbers. Just how big is this catastrophic depression going to be financially? In the US stock market crash from 1929 to 1932, the value of stocks dropped approximately $90 billion. When expressed in year 2000 dollars and adjusted to match the size of the population now versus then (284M vs 123M), this is a drop of about 2.6 TRILLION dollars. It directly affected the less than five percent of the US population who owned stocks at the time. The population at large was affected by job loss and the ensuing poverty. When the 2013 to 2025 decline of the DJIA is converted with simple arithmetic to the loss in the value of all stocks in the same year 2000 dollars, it is a staggering 18 TRILLION dollars. This is seven times as bad as 1929 to 1932. This is all awful enough, but there is a terrible difference this time. This time the loss directly affects the more than fifty percent of the US that now own stocks either directly, or indirectly in mutual funds, pension plans, IRA or 401K type plans. It will be a financial holocaust. This however will be just the beginning.

In the depths of the depression of the 1930s US unemployment reached 25%. With a depression that is financially about seven times as deep as the 1930s, what will unemployment reach this time? As in the 1930s, home values will also plummet destroying much of homeowners' equity, or all of it for those who buy homes in the years leading up to 2012-13. It is rightly said that when America sneezes the world catches a cold. If in a few short years America contracts pneumonia, what on earth will the world contract? Will what is happening in China change things? In a word, no! Our economy is driven overwhelmingly by consumer spending, no matter what we spend it on, including gasoline. Boomers will continue to unavoidably spend until their big-spending age limit is reached. When that happens the depression begins, regardless of China. China will however feel the impact in terms of the plummet in our imports that will then take place.

This catastrophic depression will happen. Our immutable demographics make it absolutely inevitable. It's nobody's fault. It cannot be fixed or wished away. The federal and state governments cannot prevent it anymore than they could prevent 2000-03. It's just as unstoppable as a tidal wave. We have to accept the reality that it is coming, and plan for it as best we can. Imagine it is 1925 and you know with certainty that the crash of 1929-32 and the depression of the 1930s are coming. What will you do? The precious few years that are left before this coming 2013-2025 depression, that will dwarf the 1930s, must be used to their fullest starting immediately. It still won't be enough time for many, but at least forewarned is forearmed. Copyright 2005 Daniel Arnold

Daniel Arnold is a graduate of the Victoria University of Manchester in the UK with Bachelor and Master degrees. After a seventeen year management and consulting career with The General Electric Company in the US, he started and ran a successful manufacturing company in Santa Clara County (Silicon Valley) California for ten years. After being bought out by a larger company he focused on investment and understanding the economy's long-term trends. This work lead directly to his shocking book The Great Bust Ahead, ISBN 159196153X available only through amazon.com with world-wide shipping. http://www.amazon.com/exec/obidos/ASIN/159196153X The book's own website with charts can be found at http://www.thegreatbustahead.com


MORE RESOURCES:
Investing Articles from EzineArticles.com
12/04/2018 04:39 PM
The Investment Mistake Otha Anders Made
In 2015, an elderly Louisiana gentleman cashed in at a nearby bank, a truckload of 55-gallon plastic water jugs of pennies that he had collected over the previous 45 years. After the last penny had been counted, Otha Anders received over $5,130 as the total amount for his pennies. That's over 510,000 pennies.
11/29/2018 12:27 PM
How To Identify Rare Comic Books
Among all of the worldwide categories of collecting, comic books are relatively new. At one time, only kids were interested in reading them for entertainment. In June 1938, Superman, the first superhero appeared in Action Comics #1, most kids were attractive to the man dressed in blue and red crashed a car, held above his head.
09/13/2018 02:06 PM
Buy a Franchise Make Money or Get Ripped Off?
Many franchises offer a road to riches, is this fact or fiction? Want to know if they are telling the truth? Want to know what to look for?
08/01/2018 10:45 AM
Top 7 Things to Consider Before You Start Investing
Be it investors, potential investors or general public who is looking to start investing, everyone gets excited the minute they have extra cash on their hands and one of the usual plans is to invest it for quick profits. People want to start making their money work for them and that's a very understandable and rational thought but sure enough one needs to be practical about their finances as well. There is a lot of due diligence and groundwork that goes into understanding the financial markets before one must start investing and it's for their best as well!
07/10/2018 02:01 PM
Investment Lessons Learned From Warren Buffet
Most people try to invest and make money but they often end up suffering losses as they make the same mistakes over and over again. Wannabe investors should try to learn and emulate the mind sets of rich people such as Bill Gates, Mark Zuckerberg, Michael Dell and Warren Buffet. Let us focus on Warren Buffet, who has been described as the best investor on the planet.
06/14/2018 09:27 AM
When Will Cryptos & Blockchain Really Explode?
Every day there is more news about what can, may, and should happen in the world of Crypto Currencies (CC's) and Blockchain. There has been significant investment, research, and lots of chatter, but the coins and the projects are still not mainstream.
05/30/2018 04:13 PM
Solutions To The Copper Hoarder's 1982 Penny Problem
Copper pennies have recently become the new "precious" metal, worth a whopping 2 cents per coin. It's nothing like the high value of gold, nor the lower value of silver, but copper has many desperate investors turn to the lowly penny for potentially huge future profits. But what the copper penny collector finds frustrating is that the last cent made of copper was minted in 1982, and many others were minted with zinc the same year.
05/29/2018 10:56 PM
How to Make Money Collecting Copper Pennies
Many investors who buy gold and silver bullion coins and coin collectors who study coins, have probably never considered collecting copper pennies to make a worthwhile profit. You've probably heard "a penny saved is a penny earned," because the lowly penny is worth one cent. While most pennies are worth a meager face value, did you know that all copper pennies are worth double their face value?
05/29/2018 09:59 AM
Why Are Investors Turning Significantly Towards Solar Energy?
Solar energy is one of the most extrusive alternative sources of energy. Numerous countries across the globe are toying with the idea of its development. Unfortunately, the share of solar energy in an overall sector is merely 0.1%. According to a survey, solar power has recorded a growth of up to 22% in the tenure of last 10 years, while 35% of its growth has been recorded in last 5 years alone.
05/23/2018 12:31 PM
Start Investing Now! 5 Ethically Correct Investment Apps For You
Investing money is now possible on the mobile front with the available investments apps. An innovative, easy and smart approach for investment, they are encouraging people to build a habit of savings, without even having a lot of cash at their stock. This article pen downs a list of best investment apps known that help users start investing with little sums.
05/15/2018 09:57 AM
Watch: Why You Should Be Getting More Than Money From an Investor
On the new streaming show Entrepreneur Elevator Pitch, founders step into the Entrepreneur Elevator and have just 60 seconds to present their idea, product or business to a panel of investors. Whether an entrepreneur gets invited into the boardroom or sent back to the ground floor depends on what our experts think in that first minute. Here, we break down the lessons aspiring business owners can take away from each episode's pitches.
04/25/2018 09:22 AM
As Technology Advances at a Feverish Pace, Safety Products Are Required
One of the many goals when crypto currency (CC) was first invented was to establish a secure digital system of transaction. The technology used was Blockchain, and still is.
04/05/2018 10:06 AM
Investing In Bank Guarantee (BG) or SBLC - Choose The Best One
There are many businessmen who invest in various bank instruments like bank guarantees or Standby Letter of Credit and they get a lot of benefits with these types of bank instruments. However, there are so many people or businessmen who still have no idea about investing in a bank instruments like BG OR SBLC.
03/30/2018 12:04 PM
LEGO: The End of Life Is the Start of Profits
There are many ways to invest your money, some are more fun than others. Welcome to the world of LEGO investing where profits can be had with a just a little patience!
03/29/2018 09:58 PM
Top Ways Traders Lose Money
Did you know that 1 out of 10 traders loses money in the financial markets when trading? Despite the damning statistics and the inherent uncertainty in the outcomes of trading, traders continue to take the risk and invest their money with the hopes of getting a return. Experienced traders and stakeholders have highlighted several ways in which traders lose money.
03/29/2018 09:58 PM
Smart Investment Strategies for Conservative Investors in 2018
As we enter 2018, investors are reflecting on the investment decision that made in previous years. Several considerations are in place especially with several unknowns based on the domestic and geopolitical realignments that could have an adverse impact on investment portfolios. In a season of low-risk and long-term investments, here are some of the smart investment strategies for conservative investors in 2018.
03/29/2018 09:57 PM
What Do Asset Graphs Show?
Asset graphs are vital visual presentation tools for highlighting financial data in the form of network structures. Financial portfolios in the form of assets decluttering not with complex relationships that arise from different components of business including ownership, management, and geographic location among other elements. The complexity of investment portfolios is witnessed not only in the contributing factors but also in the consequences of the investments such as returns and costs.
03/29/2018 09:57 PM
What Makes the NFP Special?
The net financial position (NFP) of a business entity shows the difference between the net current assets and the corresponding current liabilities for a given accounting period. The NFP is special and is not to be confused with the definition of profit and loss because NFP is expressly interested in the liquidity of the company. A simpler way of defining NFP is the difference between an entity's cash position and the net debt.
03/29/2018 09:55 PM
Simple Way to Get Rich - Reinvesting Your Earnings
Warren Buffett provides inspiration on how to get rich by reinvesting your profits. Together with his partner at that time, the magnate bought four more pinball machines and installed them in a barbershop using money earned from the first machine they had installed as their first investment. Buffets story is not different from most other people who get rich whether in businesses or in their respective professions because they all pumped back their earnings into their 'money-maker' so as to achieve growth.
03/29/2018 09:55 PM
Mastering Short-Term Trading
Short-term trading techniques involve a combination of skill, intuition, and experience by a trader. Traders make money by taking short-term positions in securities after identifying opportunities in both bull and bear markets. Mastering short-term trading requires certain attributes in a trader.
03/29/2018 09:52 PM
10 Ways the USD Affects World Markets
The United States is the world's strongest and largest economy. US currency remains dominant over other global currencies in the international markets. The behavior of the US Dollar impacts global markets significantly, culminating to both positive and adverse consequences in these markets.
03/29/2018 09:49 PM
5 Best Investments for Beginners
The adage goes something like 'the best time to start investing is now.' For some beginners, this can be painstaking, considering the volumes of information on the best investment with guaranteed returns. Other beginners will think this is an easy way to make a quick buck and plunge head first in the markets.
03/29/2018 09:48 PM
3 Tips for Short Term Investments
Today's marketplace is competitive, especially as the traditional system takes a backseat to the global economy. Practices such as international money exchange, offshore investments, and outsourcing opportunities are constantly changing the financial landscape- some for the better, and others for the worse. But there are still opportunities, right?
03/28/2018 08:33 AM
The Only Level Playing Field in Investing - Options
Options trading can be learned and our aim is to educate, entertain and enlighten. Everything you think you know about investing is nonsense. The financial world lives or dies by derivatives. Not by GARCH, P/E ratios or EBITDA. Lack of education comes at a high price. We aim to educate for free, always.
03/27/2018 11:11 AM
What to Do After LTCG?
The equity market has become more volatile since the announcement of long-term capital gain (LTCG) in budget 2018. The basic reason may not be the imposition of LTCG, but the global volatility which increased in the last fortnight and has contributed to heightened volatility in the Indian market. Such volatility has caused much anxiety among investors and they are not sure what to do with their investments that will help them maximize their gains and minimize the tax burden.
03/18/2018 10:05 PM
The ADX Is a Great Indicator That Every Trader Should Know
Trend indicators are critical to the success of any trade. The ADX is a popular trend indicator that every traders should consider using.
03/13/2018 08:00 AM
These Are the 6 Best Indicators You Should Know
Every trader should have various indicators handy in their tool box to implement their trading strategy. These 6 indicators should be an integral part of every trader's toolbox.
03/13/2018 07:58 AM
This Old Indicator Still Rules As One of the Best Indicators Used Today
MACD is an oscillating indicator that has been used for more than 40 years. This indicator is as effective today as it was when it was first introduced. Many traders today use the MACD to determine their entry and exit points on their trades.
03/08/2018 11:11 AM
5 Alternative Investment Approaches
No matter whether you're a full-time investor or a beginner, smart investment can be a safe and liberating activity that reminds us the importance of taking a risk. However, the risk must be calculated. This article focuses on different approaches that can be considered while making safe and ROI centric alternative investments.
03/08/2018 09:38 AM
What Is YOUR Government Going to Do About Crypto?
Many nations are now actively considering what to do about crypto currencies (CC's), as they do not want to miss out on tax revenue, and to some degree they think they need to regulate this market space for the sake of consumer protection. Knowing that there are scams and incidences of hacking and thievery, it is commendable that consumer protection is being thought of at these levels.
03/07/2018 09:34 AM
Here's What Happened the Last Time the US Applied Steel Tariffs
While Donal Trump says "Trade wars are good, and easy to win," history suggests otherwise. In March 2002, George Bush gave into lobbyists and slapped on steel tariffs of between 8% and 30% on imported steel.
03/03/2018 06:36 PM
How to Use Volume Oscillators and Trend Indicators to Make You Money
By using just a trend indicator to determining when to enter a trade, you are only seeing one half of the necessary information to make that trade. A volume oscillator will help you corroborate whether a trend is indeed developing and whether you should enter a trade.
03/02/2018 09:19 AM
Acceptance and Volatility - Are They Related?
Governments and institutions all over the globe are increasingly paying attention to Crypto Currencies (CC's) and the technology that underpins them all - Blockchain. Some of the attention is negative, but on balance, it is clear that more and more of the attention is positive, supportive, and exploitive.
03/01/2018 11:47 AM
The Significance of Thematic Investing
Index Services are dominating the investment markets from quite a long time by now. People who have the preference for diversity when it comes to investment are venturing towards the Thematic Investing.
02/20/2018 09:55 AM
Bitcoin Thrives Against All Odds
Bitcoin's nine-year ascent has been marked with enormous bouts of volatility. As I noted last week, there was an 85% correction in January 2015, and a few others over 60%, including a colossal 93% drawdown in 2011.
02/19/2018 09:20 AM
The Dollar Could Easily Get Stronger
Risk and returns are related to each other. Higher risks mean higher returns. There are millions of examples of this rule. Well, there's an old saying that there's an exception to every rule...
02/13/2018 09:36 AM
Visa Says You Can Buy Almost Anything, Except Crypto Currencies
The news this week is that several banks in the USA and the UK have banned the use of credit cards to purchase crypto currencies (CC's). The stated reasons are impossible to believe - like trying to curtail money laundering, gambling, and protecting the retail investor from excessive risk.
01/26/2018 09:21 AM
The "Experts" Are Getting Crypto All Wrong
The crypto-token ether sure seems like a currency. But ether isn't a currency. Because most people who trade it don't really understand or care about its true purpose, the price of ether has bubbled and frothed like bitcoin in recent weeks.
01/18/2018 03:07 PM
How to Make Informed Investments
Want to know the best way to ensure safe investing with high yields? I could talk all day about it!
01/18/2018 03:07 PM
Let Us Help You Become More Profitable
Many of our clients are young individuals that would consider themselves fairly educated investors. But being educated on the stock market or on the bond market simply isn't enough to ensure that your current and future investments give you the return that you are seeking.
01/11/2018 11:29 AM
5 Best Commodity Market Ideas
Commodity markets are a little different in terms of trading from traditional equity markets and thus, here are 5 best commodity market ideas that can work in India: Cautious to negative on MCX crude OPEC is finding it increasingly difficult to influence crude prices, which means that MCX crude could come under pressure. Moreover, Russia has joined the OPEC consortium in terms of cuts in crude supply.However, the US appears to enjoy a few clear distinctive advantages in terms of expansion in crude supply.
01/08/2018 11:18 AM
Top 5 Benefits of Investments
Going for savings is an option but not the best options available. Here we are going to discuss some of the major benefits that a person gets while investing. Let us quickly summarise everything in order to understand its benefits over savings.
01/08/2018 10:25 AM
What Is Bitcoin and the Blockchain and Why It Is Important to Invest Now
Bitcoin and blockchain technology is quickly becoming a big player in global finances, making everyday people wealthy. It is important to know about this.
12/27/2017 03:10 PM
Essentials To Make An Investment Portfolio
Investing is not a game. Not for the weak hearted. Stock markets move up and down. One cannot just predict the market.
12/27/2017 09:34 AM
Platinum Prices Will Soar in 2018
Despite a six-year decline in the price of platinum, it wouldn't surprise me to see platinum prices rise 25% next year. Here's why it will happen.
12/17/2017 10:01 PM
The 3 Biggest Investments - Understanding the 3 Biggest Investments You Will Ever Make
All investments have risk. Some investments can be handled without much thought and you may lose or earn a few buck here or there. However, there are 3 investments you are most likely going to make in life, that you do not have any room for error with! Check out this article and become familiar with these investments and start investing like a pro!
12/17/2017 10:00 PM
Invest In Yourself - The 3 Best Reasons To Invest In Yourself
There is an endless amount of reasons you should invest in yourself and the power of doing this has been proven over and over again through time. Every person in which has created success will express endlessly to anyone the power of investing in yourself. Because it works! Check out this review over the 3 best reasons to invest in yourself starting immediately!
12/06/2017 02:34 PM
The Role of Foreign Investment in Tourism Development
The decision to invest is one of the most difficult economic decisions and the most dangerous, because it is associated with many factors and variables, which are often difficult to predict their behavior and trends of development. Foreign investment is the vital and effective element to achieve economic and social development, as any initial increase in investment will lead to double and cumulative increases in the interior through the so-called investment multiplier, and an increase in income must go part of it to increase investment through the so-called accelerator. The investment has received great...
12/04/2017 10:20 AM
Here's Why the Cryptocurrency Dash Puts Bitcoin to Shame
Bitcoin is just not practical right now. There's another coin out there emerging as a viable candidate to be the new No. 1 cryptocurrency. It's called Dash.
11/10/2017 10:47 AM
How to Vet Your Financial Advisor
The brokerage industry, just like any other industry, has good financial advisors and bad financial advisors. Here are some tools and tips on how to make sure you're getting a good one.